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Rogan MacDonald/Bloomberg/News/Landov
| LEARNING OBJECTIVES | | | 1. | Define accounting. | | | 2. | Identify and discuss career opportunities in accounting. | | | 3. | Identify the users of financial information. | | | 4. | Compare and contrast the three types of business entities. | | | 5. | Describe the process used to develop generally accepted accounting principles. | | | 6. | Define the accounting terms new to this chapter. |
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| NEW TERMS | | AccountingThe process by which financial information about a business is recorded, classified, summarized, interpreted, and communicated to owners, managers, and other interested parties | Governmental accountingAccounting work performed for a federal, state, or local governmental unit | | Accounting systemA process designed to accumulate, classify, and summarize financial data | International accountingThe study of accounting principles used by different countries | | AuditingThe review of financial statements to assess their fairness and adherence to generally accepted accounting principles | Management advisory servicesServices designed to help clients improve their information systems or their business performance | | Auditor’s reportAn independent accountant’s review of a firm’s financial statements | Managerial accountingAccounting work carried on by an accountant employed by a single business in industry | | Certified public accountant (CPA)An independent accountant who provides accounting services to the public for a fee | PartnershipA business entity owned by two or more people who are legally responsible for the debts and taxes of the business | | CorporationA publicly or privately owned business entity that is separate from its owners and has a legal right to own property and do business in its own name; stockholders are not responsible for the debts or taxes of the business | Public accountantsMembers of firms that perform accounting services for other companies | | CreditorOne to whom money is owed | Separate entity assumptionThe concept of keeping a firm’s financial records separate from the owner’s personal financial records | | Discussion memorandumAn explanation of a topic under consideration by the Financial Accounting Standards Board | Social entityA nonprofit organization, such as a city, public school, or public hospital | | Economic entityA business or organization whose major purpose is to produce a profit for its owners | Sole proprietorshipA business entity owned by one person who is legally responsible for the debts and taxes of the business | | EntityAnything having its own separate identity, such as an individual, a town, a university, or a business | Statements of Financial Accounting StandardsAccounting principles established by the Financial Accounting Standards Board | | Exposure draftA proposed solution to a problem being considered by the Financial Accounting Standards Board | StockCertificates that represent ownership of a corporation | | Financial statementsPeriodic reports of a firm’s financial position or operating results | StockholdersThe owners of a corporation; also called shareholders | | Generally accepted accounting principles (GAAP)Accounting standards developed and applied by professional accountants | Tax accountingA service that involves tax compliance and tax planning |
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Performing a search on the Internet has not always been easy. In the early 1990s computer users were desperate for an efficient way to organize and find information on the Internet. In 1994 David Filo and Jerry Yang, working from a trailer on the campus of Stanford University, used their electrical engineering training to develop software that would help them locate and categorize information stored on the Internet. Yahoo! was born and by the fall of 1994 had received over 1 million hits. Yahoo! Inc. has evolved into a global Internet communications, commerce, and media company. The company services more than 345 million individuals each month worldwide. As a publicly owned company, Yahoo! Inc. releases its financial information to investors, owners, and managers quarterly. |  <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0073029920/pri29920_p0102.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (K)</a>]]>
Tom Wagner/Corbis
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| thinking critically | If you were considering purchasing stock in Yahoo! Inc., how would a basic understanding of accounting assist you? |
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